One pharma company that does seem to love social media though is Germany-based Merck KGaA—so much so that the company was prepared to go to court when its Facebook page was recently taken over by US rival Merck & Co.

Merck KGaA had entered into an agreement with Facebook for exclusive rights to the Facebook.com/merck page in March 2010. On October 11, however, the company realised it had lost administrative rights and that the page was now populated with Merck & Co. content. Although Merck KGaA complained to Facebook, the matter was not resolved. In a news story, the UK’s BBC claimed that Merck KGaA’s lawyer, Robert Horowitz, said that respondents at Facebook “either did not understand the problem… [or were] intentionally giving unresponsive answers.”

On November 21, Merck KGaA filed a lawsuit against Facebook with a New York state court requiring “pre-action disclosure” from Facebook to reveal how the administrative rights were lost.

If Facebook had not understood the situation before, it quickly swatted up on the issue. On Monday, November 28, it held its hands up and apologised for the situation, claiming it was an administrative error.

So who gets the page? According to a news report from AFP, Facebook has told the Mercks to battle it out themselves — or they are free to create a new profile page. Until that time, Facebook.com/Merck will be unavailable to all.

This whole incident may seem a little over the top—and it’s easy to see how Facebook could have made an error since the two companies sound so similar. Although they both originated from the same German company, they were split into different entities after World War I. However, it just goes to show how important social media platforms are to businesses—including big pharma. In several news reports from sources including Reuters and BBC News, Merck KGaA is quoted as saying, “Because Facebook is an important marketing device, the page is of great value to Merck…”

Personally, I think it’s great that pharma companies are taking an active interest in social media (although I suppose we’re all more likely to take an interest in something after we discover it’s been stolen by one of our neighbours… absence makes the heart grow fonder after all). Many companies are still reluctant to fully embrace these platforms, particularly as regulators, such as the aforementioned FDA, have not issued any guidelines but seem to be ever vigilant. Earlier this year, however, the Association of the British Pharmaceutical Industry (ABPI) published a guidance suggesting best practices for managing adverse events and other pharmacovigilance data from the internet and social media tools. Slowly but surely, progress is being made in laying out firmer ground for pharma companies looking to find a path to social media success.

The Senate’s Foreign Earnings Reinvestment Act, like a related bill in the House of Representatives, would reduce tax rates for CROs and biopharmaceutical firms that repatriated money earned overseas. With the money they saved, companies could hire staff and invest in research, ACRO argues.

WinAmerica, an interest group supported by various firms, says that the bill would repeat the success of a 2004 repatriation tax break. Citing information from the Bureau of Labor Statistics, the group observes that average annual private-sector employment increased by 4,385,000 jobs from 2000 through 2007, and that 98% of the increase occurred during the years when the tax break was in effect (2004 through 2006).

The tax break did not benefit the entire private sector, however. It primarily helped pharmaceutical and technology companies, according to a report by Senator Carl Levin (D-MI). Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck, and Pfizer were among the top 15 repatriators that time around. After bringing $155 billion in overseas earnings back into the country, these 15 firms reduced their overall US workforce by about 21,000 jobs and spent slightly less on R&D. Instead of creating jobs, the companies used the extra money to repurchase stock and raise their top executives’ pay by about 28%—despite express prohibitions against using the money for these purposes.

The increase in employment that WinAmerica cites seems to have occurred in industries other than those that benefited from the tax break—and for other reasons. The law that granted the previous tax break did not include a means of monitoring compliance. Unless the Foreign Earnings Reinvestment Act can do this, and can impose penalties for noncompliance, it will not create jobs for those who need them. I hope Congress takes heed of Senator Levin’s report as it considers the new bills.

Thanks to the National Institutes of Health (NIH), the new drugs may already be here. The organization conducted a computational study that analyzed genomic and drug data to predict new uses for currently marketed medicines. “If we can find ways to repurpose drugs that are already approved, we could improve treatments and save both time and money,” said Rochelle M. Long, director of NIH’s Pharmacogenomics Research Network, in a press release.

Scientists examined a publicly available NIH database that contains the results of thousands of genomic studies. The database includes information about changes in gene activity that resulted from diseases or the administration of medicines. Using a computer program, scientists searched for drug–disease combinations whose genetic effects canceled each other out. For example, if one disease increased the activity of certain genes, the program searched for drugs that would decrease the activity of those genes.

The program correctly predicted that prednisolone could treat Crohn’s disease, which is already known. But the program also came up with previously untried treatments, such as cimetidine, an antiulcer medicine, for lung cancer. Researchers are investigating cimetidine’s effectiveness for this indication, and also whether the anticonvulsant topiramate could treat inflammatory bowel disease as the computer predicted.

Although expanding the indications of existing drugs does not necessarily represent innovation, it could certainly help improve patients’ lives. The approach also could mitigate the effects of industrywide cuts to R&D budgets. The NIH computational study is yet one more example of how drugmakers can take advantage of the public sector’s expertise.

Also see Amy Ritter’s related blog post and our story about NIH’s involvement in rare disease research.

New Jersey’s pharmaceutical workforce has shrunk as a result of mergers and flagging sales, and observers are searching for a tonic to give the industry new life. One necessary strategy is to form partnerships with international investors or other drugmakers, said David Finegold, dean of Rutgers University’s school of management and labor relations, at the EU–NJ Business Forum. Investors in South Korea, India, and China are putting a lot of money into the industry, but they don’t have people with experience in gaining FDA approval for their products, Finegold said, according to The Record.

Finegold’s model of choice is the partnership between Merck & Co. and the Wellcome Trust medical charity, which is based in the United Kingdom. The partnership aims to prevent diseases that affect poor countries by developing new vaccines and optimizing existing vaccines. Merck and the Wellcome Trust invest equally in the partnership and share decision-making responsibilities.

The partners run the venture like a business, but according to a not-for-profit model, which is a foreign concept to most drugmakers. Yet the pharmaceutical industry will have to get used to this idea. To survive, firms will have to abandon their high profit-margin business models, Finegold said.

Give him credit for trying to get risk-averse drug companies to adopt new and creative ways of thinking and operating. Although Finegold’s recommendations could help stimulate the industry, I wonder whether they would increase domestic employment. The Merck–Wellcome Trust partnership, Finegold’s template, is based in India. An ideal business model would foster international cooperation, create domestic jobs, and encourage the development of needed therapies. If nothing else, Finegold’s remarks will help start discussions that could lead the industry toward this ideal.

By declining to hear Novartis’s appeal, the US Supreme Court left intact a Second Circuit Court ruling that pharmaceutical sales representatives are entitled to overtime pay. Other companies have taken notice because the Supreme Court’s action will affect the entire pharmaceutical industry.

For years, Novartis and its competitors have argued that sales reps fell under the “Outside Sales” or “Administrative” exemptions to overtime pay under federal, New York, and California law. When sales reps sued Novartis for compensation, the US Department of Labor (DOL) filed an amicus brief on their behalf, saying that the two exemptions did not apply to them. The Second Circuit gave deference to DOL’s opinion, ruling that Novartis must pay retroactive compensation to their sales reps. Novartis is now estimated to owe at least $100 million to 2500 current and former sales reps.

Like Novartis, Merck had a similar case before the Supreme Court and also failed to get a hearing. In its brief, Merck pointed to appellate courts that had not given deference to DOL’s amicus brief, but the Supreme Court’s denial of a hearing essentially nullifies that argument.

The current case reminded me that only four months ago, a US District Court found that Novartis had discriminated against its female employees, paying them less and promoting them less often than their male counterparts. This pair of cases certainly gives the impression that Novartis is not exactly a worker-friendly company.

Perhaps this latest defeat will lead Novartis to consider workers’ rights and labor law more seriously in the future. The outcome of the lawsuit at least provides hope that employees’ grievances ultimately can be redressed. These days, workers need all the hope they can get.

According to preliminary figures, the US Food and Drug Administration approved 21 new drugs in 2010. This number is not much better than the industry’s recent low of 18 new drugs in 2007. Several high-profile drugs failed to get approval during 2010, causing embarrassment for Big Pharma. FDA asked AstraZeneca for more information about its blood thinner Brilinta, and the delay in approval hurt the company’s share price. FDA also rejected a long-acting version of Byetta, a diabetes drug manufactured by Eli Lilly and Amylin Pharmaceuticals, saying that more clinical data were necessary.

Competition from generic drugs will only heighten the importance of successful R&D efforts for innovators, and we can be sure that companies will try various strategies to boost the return on their research investments. We could see a continued increase in outsourcing in 2011, which would help drugmakers share the risk of developing new drugs with service providers. Outsourcing also might help companies lower the costs of drug development and improve the management of their resources, which now seem more precious to many companies. It’s also possible that manufacturers will dedicate more effort to developing monoclonal antibodies, which are potentially quite profitable and increasingly in demand.

Changes are already underway at Merck & Co. New CEO Kenneth Frazier told investors that the company would make “tough” R&D spending decisions and stop the development of less-promising drugs more quickly. To prevent drugs with weak commercial prospects from entering expensive late- stage development, the company has tied researchers’ compensation to the three-year return on invested capital. Time will tell whether this market-based approach will improve the notoriously idiosyncratic R&D process.

I give Frazier credit for recognizing the importance of innovation to Merck’s prospects. Other companies are already coming up with their own approaches to discovering more approvable drugs. For the health of the industry, and of patients worldwide, let’s wish them luck.

This week, another pharmaceutical executive has stepped down, Elmar Schnee, head of the pharmaceutical division of Merck KGaA (Darmstadt, Germany). His departure follows other high-profile changes among the pharmaceutical executive ranks, namley Jeffrey Kindler leaving as head of Pfizer (New York) and Richard Clark turning over the helm of Merck & Co. (Whitehouse Station, NJ). These former executives and their successors face an all-too familiar challenge—the pressure for successful product development in light of looming patent expirations and the need to implement new strategies for revenue growth.

Schnee suffered two recent product setbacks while at Merck KGaA. In September 2010, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a negative opinion regarding the marketing authorization application for cladribine tablets as an oral treatment for relapsing-remitting multiple sclerosis. Cladribine was approved in Russia in July 2010 and in Australia in September 2010 and is under regulatory review in the US. Also, in November 2009, CHMP issued a negative opinion for Merck KGaA’s Erbitux (cetuximab) in combination with platinum-based chemotherapy for treating non-small-cell lung cancer. Erbitux is approved for other cancer indications, colorectal cancer and squamous cell carcinoma of the head and neck. The drug posted 2009 sales of EUR 697 million ($932 million). Analysts had projected both drugs as potential blockbusters with sales in excess of EUR 1 billion ($1.3 billion), according to a recent Wall Street Journal article.

Merck KGaA named Stefan Oschmann, former president of emerging markets of the US-based Merck & Co., as the new head of Merck KGaA’s pharmaceutical division. The move is seen by many as an interest by the German chemicals and pharmaceutical company to further internationalize its pharmaceutical operations. Merck Serono is the key piece of Merck KGaA’ pharmaceutical business, which posted sales of EUR 5.3 billion ($7.1 billion). The company also has a consumer healthcare business.

Although vastly different in size, the recipe for change was similar at Pfizer when the company announced earlier this month that it had appointed Ian C. Read, formerly head of the company’s global biopharmaceutical operations, as president, CEO, and director, succeeding Jeffrey B. Kindler. Read has led Pfizer’s worldwide biopharmaceutical businesses since 2006 and also has international experience. Read joined Pfizer in 1978 and assumed positions of increasing responsibility in Latin America. In 1996, he was appointed president of Pfizer’s International Pharmaceuticals Group, with responsibility for Latin America and Canada. He was named corporate vice-president in 2001, and assumed responsibility for Europe. Pfizer also appointed  George A. Lorch, who has served as an independent director since 2000, as nonexecutive chairman of the board of directors.

Under Kindler’s tenure, Pfizer acquired Wyeth for $68 billion in 2009. He leaves Pfizer as the number one global pharmaceutical company, but with revenue uncertainty in light of looming patent expirations. The key challenge for Read in taking over the helm of Pfizer will be to contend with the patent expiration of Lipitor, the company’s and the pharmaceutical industry’s top-selling drug. Lipitor had 2009 sales of $11.4 billion, accounting for approximately 23% of Pfizer’s 2009 global sales. Pfizer’s difficulty in replacing that loss with new products, exemplified by the late-stage failure of torcetrapib, the hoped-for Lipitor replacement, has raised concerns. Other blockbluster drugs are slated to lose US basic product patent protection in the near term, according to the company’s 2009 annual report. Some key products are Celebrex ($2.4 billion in 2009 sales, patent expiration in 2014), Viagra ($1.9 billion in 2009 sales, patent expiration in 2012), Xalatan ($1.7 billion, 2011 patent expiration), Detrol ($1.2 billion, 2012 patent expiration), and Geodon ($1.1 billion, 2012 patent expiration).

US-headquartered Merck & Co. named Kenneth Frazier, formerly president of Merck & Co., as CEO and president, effective Jan 1., 2011, succeeding Richard Clark, who is continuing as chairman of Merck & Co. Frazier will lead Merck & Co. following its $49-billion merger with Schering-Plough (Kenilworth, NJ) in 2009. The move was in line with a succession plan at Merck & Co. with Clark first ceding the role of president to Frazier in April 2010. Merck & Co. faces the US patent expiration for its top-selling drug, Singulair (2009 sales of $4.7 billion) in August 2012.

These new CEOs and other pharmaceutical executives will continue to be put to task to navigate the uncertainty of drug development while meeting short-term and mid-term revenue expectations. How they will respond to these challenges is not only important for individual companies but for the industry as a whole. As we near the end of 2010, a question to be answered during the next several years will be whether the platforms for revenue growth taken by these and other companies, such as emerging-market growth strategies, product-development intensification in biologics, and merger and acquisition activity, will be sufficient or will be the industry be due once again for another changing of the guard.

John Lechleiter, Lilly’s chairman and chief executive officer, told analysts during a conference call that acquiring small and medium-sized companies will continue to be part of the company’s strategy, according to the Indianapolis Star. His audience didn’t seem to be convinced that this plan would work.

“I think the prevailing consensus among investors is that given some of the big expirations that lay ahead, at some point, Lilly will have to do a larger acquisition to fill the gaps,” said Tim Anderson, a drug analyst at Sanford Bernstein, according to the Star. He also suggested that Lilly could seek to be acquired.

Lilly expects a “trough period” to begin in 2014, when several patents will expire before the company can launch new major drugs. Derica Rice, Lilly’s chief financial officer, said that the company plans to pursue growth opportunities in overseas markets to help it through difficult times, according to the Star.

Lilly’s situation is emblematic of the problems Big Pharma faces right now. AstraZeneca (London), GlaxoSmithKline (London), Merck (Whitehouse Station, NJ), and Pfizer (New York) all face patent expirations in the coming years. Companies have tried to remain profitable by cutting costs and laying off employees. We’ve also seen Pfizer gobble Wyeth (Madison, NJ) and sanofi-aventis (Paris) pursue Genzyme (Cambridge, MA) to gain access to new drugs and increased revenue. And Lilly is not alone in trying to find new and emerging markets for its products. But I think these tactics treat the symptoms rather than the underlying problem.

What the industry needs is innovation. Without fresh investment in research and development, companies will not discover new drugs that could become the top products of the future. Of course, discovery and development are difficult processes, and setbacks are common. Lilly itself recently abandoned developmental drugs to treat diabetes and Alzheimer’s disease that had failed to live up to their promise.

Although the development process may be tougher now than before, I think it is still the industry’s best route to profitability. After a while, drugmakers will run out of employees to lay off, small companies to buy, and emerging markets to exploit. On the other hand, patients still have medical needs that could be met with new therapies. Companies that redouble their effort and investment in discovery will be more likely to survive the trying times ahead.

The trial will study a combination of two vaccine candidates, Ad26.ENVA.01 (manufactured by Crucell) and Ad35-ENV (developed by IAVI), in healthy adults who do not have HIV. The trial will focus on the vaccines’ safety and effectiveness as a prime-boost regimen. The goal of a prime-boost combination is that one vaccine is administered to prime the immune system and elicit a certain immune response before a second, or booster, dose is given to enhance the overall immune response.

A previous clinical trial based on a prime-boost combination took place in Thailand and represents the first time an AIDS vaccine showed promise in reducing the risk of infection. Results released in September 2009 showed that the combination of vaccines lowered the risk of acquiring HIV by roughly 30%. Additional data were presented at the AIDS Vaccine 2009 Conference and published in the New England Journal of Medicine. The research team wrote that, “Although the results show only a modest benefit, they offer insight for future research.”

Also announced this week was that the International AIDS Vaccine Initiative (IAVI) appointed Michael Caulfield executive director of the IAVI AIDS Vaccine Design and Development Laboratory (DDL). Caulfield previously held research positions at Merck (Whitehouse Station, NJ) and the Cleveland Clinic. As leader of the DDL, he will be responsible for IAVI’s translational research and vaccine discovery, as well as for expanding its R&D team.

“Mike’s joining at a critical time for the field,” said Wayne Koff, IAVI’s chief scientific officer, in a press release. “We’re in the middle of a renaissance in AIDS vaccine design and development.”

In related news, scientists at the National Institutes of Health (NIH) announced the discovery of two human antibodies that can stop more than 90% of HIV strains from infecting human cells in the laboratory. The team, part of the Vaccine Research Center, a division of the National Institute of Allergy and Infectious Diseases at NIH, also demonstrated how one of the antibodies does this. The scientists said the antibodies could be used to design improved HIV vaccines, or could be further developed to prevent or treat HIV infection, according to the group’s press release. The work was published in Science in two articles, found here and here.

The NIH team’s discovery plus the results of the Thailand vaccine trial are examples of exciting progress in the field of AIDS vaccine research. Many are hopeful that the Crucell clinical trial will add to the upswing of encouraging results.

See previous posts on this topic:

The AIDS Vaccine Challenge

Roche Ends HIV Research Program

Vaccine Makers Prepare for Challenges Old and New

The inspection report in question contains disturbing observations about J&J’s Lancaster, Pennsylvania, facility, which manufactures over-the-counter products such as Pepcid and Mylanta. If the inspectors’ observations are to be believed, plant managers have been taking a laissez faire approach to the facility’s manufacturing operations. For example, inspectors noted that the plant’s instructions for cleaning and maintaining equipment omitted crucial details about the materials and methods required. Nor did the instructions explain how to disassemble and reassemble equipment to ensure proper cleaning. Inspectors also claimed that the plant’s equipment was not inspected routinely according to written procedures.

This state of affairs opens the door to malfunctions, and FDA officials apparently had a chance to witness several of them. During one packaging operation, a capper machine crashed, a cooling loop failed, and operators observed leaky bottles of product. Yet inspectors said that staff did not conduct quality reviews of products that had been manufactured during equipment failures.

Inspectors did not give the plant’s analytical-testing operations high marks, either. FDA officials said the plant’s laboratory controls did not establish scientifically sound test procedures to ensure that products meet standards of identity, strength, purity, and quality. Inspectors observed as analysts strayed from written test procedures without justification. And when employees took samples of drug products to determine their conformance with specifications, they did not properly identify the samples, according to FDA.

The well-publicized quality problems at its Fort Washington, Pennsylvania, plant apparently haven’t spurred J&J to confirm that its other US manufacturing operations are up to snuff. But the new problems in Lancaster also affect Merck & Co. (Whitehouse Station, NJ), which operates the plant as a joint venture with J&J. I’m sure that Merck does not want its reputation to suffer by association with J&J. If it hasn’t already, Merck will probably lean on its partner to help improve the Lancaster facility. It might take this extra pressure to get J&J to seek and address systemic problems at its manufacturing operations. In the meantime, the public will eye both companies with suspicion.